The Lifecycle of the Substitute and Its Purchasing Power, 6

Debt: If that weren’t already incredible enough, things get even more paradoxical when debt enters the scene. If fiat money were issued and exchanged against the issuer’s commitment of future production and delivery, and so assimilated to debt/credit, then just like with debt/credit the creditor may require the debtor to pay an interest for the duration of the credit. So the party accepting fiat money may require the issuer to pay an interest. And if the fiat money were issued without any commitment of future delivery, and the purchasing power exchanged with it were a gift, not a loan, then the party bestowing it may require its recipient, the money issuer, to pay an interest for the gift, or something like that. That may be justified; at the very least more justified than the following… Because debt money, debt added to fiat money, means that the issuer, after exchanging fiat money out of nothing with existing purchasing power, not content with this, charges an interest for that fiat money out of nothing, too. Please note: the one charging the interest is the debtor, not the creditor; the recipient, not the giver. We are confronted here with the paradox of reversing the interest: the recipient demands the giver an interest on what is given!

Fiat plus debt: Now that both components are thrashed out, we can reassemble them and appraise their combined effect. The issuer of fiat debt money creates it out of nothing, that is, at no cost, exchanges it for existing purchasing power, that is, receiving a “gift” some may fancy to call fraud, extortion, robbery and the alike, and from then on demands an interest for the gift received from the parties bestowing it, for the duration of the gift, that is, a rather perpetual duration. Kind of paradoxical crime isn’t it? A very good reason to call it exponential is the compound interest: now you owe me 10 units of purchasing power and for such debt I’ll charge you a 10 percent interest every unit of time; after the next unit of time you will owe me 10 plus 1 equalling to 11 units, on which I’ll charge you the same interest, only this time calculated on 11 units, not 10; after another unit of time you will owe me 11 plus 1.1 equalling to 12.1 units, on which I’ll charge you the same interest, only this time calculated on 12.1 units, not 11 etc. etc. Sooner or later I’m going to own and destroy everything and everyone, isn’t it?